Oil prices were steady supported by major oil-producing countries’ efforts to rein in supply amid concerns about the recovery of fuel demand from the Covid-19 pandemic.
Brent crude futures rose by five cents, or 0.4%, to reach $44.95 a barrel and US West Texas Intermediate (WTI) crude futures remained unchanged at $42.82 a barrel, Reuters reported.
On 20 August, both the benchmark contracts decreased by 1% after the number of Americans filing for unemployment benefits last week was greater than expected.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, urged oil-producing nations that produced above output targets in May-July to reduce further in August and September.
This amounts to output cuts of 2.31 million barrels per day (Mbpd) to compensate for their recent oversupply.
OPEC made this announcement as part of a virtual conference.
The 21st Meeting of the Joint Ministerial Monitoring Committee (JMMC) reviewed the monthly report prepared by OPEC’s joint technical committee (JTC).
AxiCorp market strategist Stephen Innes was quoted by Reuters as stating: “But with enforcement tactics reduced to merely public smearing of laggards or a very unlikely disbanding of the agreement, the proof will need to be in the pudding as it remains critical that non-compliant members toe the line to bring the markets closer to equilibrium.”
The OPEC countries that made additional voluntary cuts in June include Iraq, Nigeria and the UAE. These nations overproduced 50,000bpd during the May-July period.
National Australia Bank commodity research head Lachlan Shaw said: “My expectation would be demand continues to be quite a bumpy recovery.”
According to analysts, Brent could be seen holding near $45 a barrel and is not expected to reach much higher within a short time.